Rents slowly returning to pre-Covid level in commuter belts: Proptrack
Suburbs with good access to commuter public transport that typically commanded higher rents have faced pressures during the pandemic.
"Covid has changed the benefits of short commutes," says Angus Moore, an economist with REA Group's PropTrack who noted rental price recovery hasn't seen evenly across cities.
"Suburbs which had a high share of public transport users, have seen median rents decline and have significantly underperformed other areas.
"Renting in a suburb where it’s easy to commute to work wasn’t a priority during Covid," he said.
"For many renters, the benefits of living close to work dissipated in 2020. If you’re working from home, there’s far less need for public transport.
He noted even for essential workers who were still going to work, private rather than public transport became much more attractive.
"There was less traffic on the road and travelling via public transport carried higher risks," he noted.
This re-evaluation shows up in how rents have changed since the pandemic began, he said.
"Rents have fallen sharpest in suburbs where people stopped travelling to work.
"The relationship is again extremely stark.
"The larger the decline in the number of people going to work, the bigger the fall in median rent for that suburb.
In suburbs where people have mostly kept going to work, rents have grown – and have done so quite strongly (20% or more) in some areas, the report noted.
As the Covid crisis fades and people return to the office, shorter commutes will start to become more attractive again.
While it’s too early to know whether the premium inner-city suburbs used to command will fully return, we can already see some signs in Western Australia, South Australia, Tasmania, and Queensland – where Covid has been less severe.
In these states, the number of people going to their workplaces is mostly back to pre-pandemic levels.
Rents in these cities have been growing faster than in Sydney and Melbourne.
And while rents in the inner city have grown slower than in the outer suburbs, there is much less of a divide than in is the case in Melbourne and Sydney.
This suggests the weakness in rents we see in inner-city Melbourne and Sydney will start to reverse.
Even now, public transport use is roughly 25% lower than pre-pandemic in SA and WA, even though these states have roughly as many people going to work as pre-Covid.
If the shift away from public transport is permanent, inner city suburbs might have permanently lost some of their commute-convenience appeal.